What is a real estate broker and what do they do?

There’s a lot of jargon in the real estate industry, making many job titles far from self-explanatory for the casual outsider. For many people, real estate brokers are no exception. So what is a real estate broker exactly, and what do real estate brokers do?

Real estate brokers are licensed professionals who help people buy, sell, and rent properties. They also hire and manage real estate agents. Let’s explore how they do this in more detail, their qualifications, the critical role they play behind the scenes in real estate transactions, the difference between real estate broker and Realtor/agent, how to become a real estate broker, and more.

What is a real estate broker?

Real estate brokers are highly qualified, licensed real estate professionals with in-depth knowledge of what it takes to buy, sell, and rent property. They understand the goals and concerns of all parties involved in real estate transactions, including lenders.

Real estate brokers typically begin their careers as licensed real estate agents. In many states, aspiring brokers must gain experience in the field before meeting additional education requirements to qualify for a broker’s license.

What does a real estate broker do?

Whether a broker works for themselves or a brokerage, their priorities are to ensure lawful real estate transactions, check that all paperwork is correct and complete, and properly record and report all money, such as funds in escrow accounts.

Once they’ve earned their license, brokers oversee the real estate transactions conducted by their real estate agents. This ensures compliance with all legal requirements and ethical standards.

Because all real estate agents must work for a broker, imagine a broker or brokerage firm as the umbrella that covers a real estate agent, like the one you’ll enlist to help you sell your home or purchase a property. Real estate agents handle clients, listings, and sales. Brokers, on the other hand, oversee each transaction and ensure legal compliance. Brokers can carry out all agent duties plus additional responsibilities like hiring and managing agents, which requires a broker’s license.

“A real estate broker, in essence, is like the Grand Poobah of all the real estate agents they monitor, train, and provide guidance to,” says Jason Gelios, a REALTOR® with Community Choice Realty. “Think of them as a manager or supervisor who looks over their team of agents to ensure they are abiding by real estate law, maintaining and implementing compliant marketing, and treating clients with the utmost respect and due diligence.”

Additional broker duties

Most of the key differences between a real estate broker and an agent lie in what they can and can’t do.

• A broker can move money in and out of an escrow account.
• A broker can mediate conflicts in a legal dispute.
• A broker can hire agents.

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Types of real estate brokers

There are three types of real estate brokers: associate, managing, and principal/designated broker. Here’s a breakdown of each:

Principal/designated broker

A real estate brokerage will employ a principal broker who is responsible for all operations and transactions at the firm. Think of them as the CEO of the brokerage. They have the highest level of authority and shoulder the most responsibility.

“A principal broker is often the owner or leader of a real estate brokerage firm. They sponsor and are responsible for all of the salespeople and associate brokers working under their supervision,” says Douglas Wagner, a licensed associate real estate broker.

The principal broker makes sure all agents comply with state real estate laws, all transactions are financially and legally sound and compliant, and zero fraud is being committed.

Because of the legal implications involved in each real estate transaction, every brokerage firm must have a principal broker for their office at all times.

Managing broker

A managing broker, on the other hand, has a broker’s license and handles the day-to-day operations of a brokerage. The managing broker actually covers more of the HR functions than the real estate transactions that come under the principal broker’s scope of work.

Case in point: A managing broker would typically be responsible for all agent licensing issues. They would also onboard, train, and mentor new agents and facilitate continuing education opportunities for all agents.

Some principal/designated brokers act as managing brokers, but that’s not an industry norm.

Associate broker

In bigger brokerages, the principal broker will hire associate brokers and salespeople to help with the workload. Associate brokers – also known as broker associates, broker salespersons, and affiliate brokers – are licensed and can act as the broker’s agent when conducting real estate transactions.

“Associate brokers are often the boots on the ground – leading tours, handling marketing, and hosting open houses and property showings,” Wagner adds.

Associate brokers are typically independent contractors. They can only work for one broker or brokerage at a time.

How do real estate brokers affect you?

Truth is, buyers and sellers usually work directly with a real estate agent, not a broker. The agent, not the broker, maintains the relationship with the buyer or seller they represent. Your agent is qualified to help you through your entire real estate transaction.

The agent’s broker generally works behind the scenes to complete the legal aspects of the transaction. In most real estate transactions, you will never see or interact with this person. Don't sweat it if you never meet your agent’s broker. This expert is busy verifying the paperwork and legal details behind the scenes.

“Brokers often work as proxies for buyers and sellers, insulating them from the friction inherent in real estate selling and buying. They serve the interests of buyers and sellers by keeping the principles at a safe distance so that the subjective variables and emotional engagement related to home buying and selling are neutralized and both sides achieve their goals,” says Wagner.

Gelios says he’s also observed real estate brokers getting involved in a transaction between buyers and sellers “when a dispute arises that cannot be resolved by both the listing and selling agent, with the hopes of a solution being offered.”

How are real estate commissions split between agents and brokers?

Real estate agents typically work for a standard commission, which is commonly negotiated to around 4% to 6%  of a home’s purchase price. This commission is negotiated upfront and is typically split evenly between the seller’s (listing) broker and the buyer’s broker (3% each in a 6% scenario).

Imagine you list your home with a brokerage, and a buyer submits a contract to purchase your home for $200,000. In this scenario, you agree to pay 6% of the purchase price in commission fees. Your listing broker will get 3% ($6,000), and the broker who brought in the buyer gets 3% ($6,000).

You might assume that your listing agent keeps their full $6,000 share. But they need to split some of that money with their broker, based on percentages agreed upon upfront.

“Your typical agent, who may be new to the business, often shares 50% of their commissions with the real estate broker. More experienced agents share less of their commissions,” says Gelios.

Suppose your listing agent has agreed to an 80/20 split with their broker, and the buyer’s agent has a 70/30 split with their broker. Here’s how that breaks down based on a 6% total commission ($12,000 total, in this example):

• $4,800 to the listing agent.
• $1,200 to the listing broker.
• $1,800 to the buyer’s broker.
• $4,200 to the buyer’s agent.

Splitting commissions between agents and brokers is standard practice in the real estate industry. Commission splits cover the broker’s efforts as well as expenses, like administrative services, and agent supplies, such as keys and lockboxes.

Brokers may also earn commissions on transactions for personal clients. So, in the example above, if the broker is the listing agent as well as the owner of the home for sale, they would keep every penny of their 3% commission on the $200,000 house. In addition to commissions, brokers can make money in other ways, such as charging agents a monthly fee to cover administrative services, regardless of an agent’s performance.

How do you become a real estate broker?

While specific requirements will vary by state, to become a broker, you must:

• Be a licensed real estate agent for a predetermined time.
• Be at least 21 years old.
• Live in the state where you’re applying for a brokerage license.
• Complete the required broker education hours.
• Pass the state broker licensing exam.
• Maintain a clean criminal record.

“The best path to becoming a broker generally involves gaining experience, as most states require 2 to 3 years as a practicing agent,” notes Yan Gladkov, a licensed real estate salesperson with Keller Williams NYC. “It’s also smart to complete additional coursework in areas like real estate law, brokerage management, contracts, and finance.”

The bottom line: Brokers bear more responsibility

Real estate brokers are experienced, licensed professionals who play an essential role in keeping property transactions compliant, organized, and on track. Whether you’re buying or selling, you’ll likely work directly with a real estate agent, not a broker. But remember that your agent operates under the supervision of a broker who ensures every deal meets financial and legal standards. Understanding how these roles differ can help you navigate the buying or selling of a home with more confidence.

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